Tortilla looks to accelerate growth through franchising as revenue continues to climb

By James McAllister

- Last updated on GMT

Tortilla looks to accelerate growth in UK and internationally through franchising as revenue continues to climb
Tortilla is aiming to accelerate its expansion by ‘doubling down on franchising’ as it looks to capitalise on UK and international growth opportunities.

The initiative forms part of a five-point plan of refined strategic priorities developed by Tortilla to drive profit in the years ahead.

It comes as the group, which is the UK’s largest fast-casual Mexican restaurant group, reported a 14% increase in revenue to £65.7m in its results for the year ended 31 December 2023.

Tortilla attributed the revenue rise to ‘continued momentum’ driven by new openings, the annualisation of the openings from 2022, and the full-year impact of the Chilango acquisition.

Like-for-like sales rose by 3.6%, while adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) saw a 16% increase from £4m in 2022 to £4.6m in 2023.

In total, Tortilla reported a loss before tax of £1.1m for the period, widening slightly from £0.9m the year before.

The group added that it increased its gross profit margin from 76.4% to 77.3% over the period, which it credited to effective negotiations with its main food suppliers, securing favourable commercials across 76% of the food portfolio.

Tortilla added six company-operated locations and one franchise site to its portfolio over the year, taking its estate to 87 sites in total.

“Throughout 2023, we dedicated ourselves to building resilience, especially enhancing profitability, as we recovered from macro events in 2022,” says Andy Naylor, chief executive of Tortilla.

“Our efforts included streamlining costs, bolstering franchise partnerships, augmenting efficiency via technology investments, and enriching our team with fresh talent, all while continuing site deployments.

“These initiatives have solidified the foundation for our continued success.”

As well as doubling down on franchising, Tortilla’s strategic pillars for the year ahead – dubbed ‘Tortilla’s Vital 5’ – also include improving its UK profitability; further brand investment; greater investment in team and technology; and developing the brand internationally.

Alongside its existing franchise partnerships in the UK with SSP Group and Compass UK & Ireland, Tortilla also has an agreement in the Middle East with Eathos and currently operates nine sites across the UAE.

The group says the success of its Middle East franchise has given it the confidence to explore further franchise opportunities in the region as well as other jurisdictions including continental Europe.

Tortilla has at least five openings planned for 2024 with its current franchise partners, as well as three company-operated sites.

“The appetite for Mexican cuisine is surging, and Tortilla, as the dominant market leader in the UK, has an unparalleled set of advantages to capitalise on this burgeoning opportunity across the UK and Europe,” continues Naylor.

“Today, I'm pleased to unveil our reinvigorated strategic vision: 'Tortilla's Vital Five.' Building upon our proven track record, this strategy will create sustainable profitable growth in the years ahead, unlocking substantial value for our shareholders.

“Tortilla continues to have immense potential and I am excited to lead the business through the next chapter of the journey.”

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